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The rising number of new immigrants who are living in poverty in Canada is a “tinderbox” that could explode into an “inferno,” a new study warns.

More than 36 per cent of immigrants who have been in the country for less than five years live in poverty, according to the latest Canadian Labour Market Report. That compares to 25 per cent in the 1980s.

“Increasing (immigrant) poverty is a tinderbox that can ultimately (descend) into social discontent,” write Peter Dungan of the University of Toronto, Tony Fang of York University and Morley Gunderson of the University of Toronto.

Poor immigrants could grow increasingly disenchanted because many were attracted to Canada by policies that give points “for skills and education, but such credentials are often not recognized,” says the report for the federally-funded Canadian Labour Market and Skills Researcher Network.

A continued failure of new immigrants to assimilate economically “could turn into an inferno,” the authors add, “if it were also accompanied by negative reactions on the part of domestic-born Canadians.”

The authors worry that more Canadians will start to believe that the steady flow of immigrants is hurting their job chances, wages and the economy in general.

But the three economists also report that Canada’s high immigration rates — twice that per capita of the U.S. — are a net benefit for Canadians.

While Canada’s immigration policy produces winners and losers in different economic spheres, the economists said that over the long run, immigration leads to a slight increase in the per capita income of the average Canadian.

The scholars’ disturbing analysis about immigrant poverty rates adds to an emerging picture showing Canada’s new arrivals are polarizing into two camps: Immigrants who struggle economically and those who are very well-off.

Two Canadian Labour Market Reports that show rising poverty among new immigrants, especially older ones, are being released the same month that a Bank of Montreal survey revealed 48 per cent of the country’s millionaires were either born outside Canada or had at least one parent who was.

The BMO survey found the proportion of first- and second-generation immigrants among “high-net-worth British Columbians” — defined as those with investable assets of $1 million or more — was 68 per cent, the highest in the country.

But while Canada is welcoming many well-off immigrants, the Canadian Labour Market study underscores how Ottawa is also allowing in a large cohort of foreign-born people who can’t make ends meet, leading to potential social frustration.

Another Labour Market study released this week found that immigrants who arrive after age 50 “often struggle in the Canadian labour market compared to both their native-born peers and their younger counterparts.”

Older immigrants have a great deal of difficulty getting their credentials accepted and building up either private or public pension plans in Canada, write economists Ted McDonald of the University of New Brunswick and Christopher Worswick of Ottawa’s Carleton University.

“Income differentials are especially pronounced for older immigrants from non-traditional source countries (Africa, Asia and the Caribbean, according to Statistics Canada).”

Many older immigrants end up working well past normal retirement age.

University of B.C. economist Thomas Lemieux has also been exploring the increasingly large financial gap among immigrant groups.

While the earnings gap between the rich and the poor has been widening in general in Canada, that income gap is growing “even worse for immigrants, especially male immigrants,” Lemieux said.

Lemieux supports the Canadian government’s efforts to increasingly favour prospective immigrants who speak English or French well.

But better access to all kinds of less-expensive higher education, Lemieux emphasizes, is the main way to decreasing earning gaps among new immigrants and all Canadians.

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